TORONTO (Reuters) - The Canadian Auto Workers union said on Monday it had reached a tentative four-year agreement with Ford Motor Co, and extended talks with Fiat SpA’s Chrysler Group LLC and General Motors Co past a midnight deadline.
The union said it had agreed to continue talks indefinitely, and give 24 hours notice before any strike. CAW Chief Economist Jim Stanford said both companies are willing to negotiate around the pattern set by Ford’s agreement.
“Both companies must keep working towards the pattern settlement, and both companies have indicated in writing to our leadership that they are prepared to do that,” said Stanford.
The union, which has some 20,000 members, had previously warned that without a tentative agreement before contracts expire at 11:59 p.m. on Monday (0359 GMT on Tuesday), it could stop work at one or more of the companies, in what would have been the first Canadian auto strike since 1996.
“We have agreed with the CAW to extend the agreement. We are currently reviewing the tentative agreement that has been reached with Ford,” said Chrysler spokeswoman Jodi Tinson in an email.
GM said it had agreed to continue talks.
“GM Canada looks forward to continuing with the constructive dialogue,” said GM spokeswoman Adria MacKenzie in an email.
The Ford deal, which will create about 600 jobs at the company’s Oakville, Ontario, plant, came after Ford recognized the CAW would not accept a permanent two-tier wage scale for new hires and veteran workers, Lewenza said.
“It’s a damned good deal in these economic times,” he said.
All three automakers - with Chrysler the most publicly outspoken - have argued adamantly that Canadian labor costs are the highest in the world and must drop to match those of the UAW in the United States, or future production and investment in Canada will be jeopardized.
The agreement will freeze wages for Ford’s 4,500 unionized workers, reflecting the stronger Canadian dollar’s impact on production costs, the CAW said at a press conference Monday afternoon.
It will also take longer than in the past for new hires to reach the highest end of the pay scale under the new agreement, with the “earn-in” period expanded to 10 years from six. They will also start at a lower wage, earning just 60 percent of the highest hourly rate, down from 70 percent previously.
New employees will also have a hybrid pension plan, a mix of a defined benefit and defined contribution plan, the union said. There is no change to the pension plan or eligibility rules for current members.
The agreement does not include any cost of living adjustment, something Lewenza had fought for in negotiations that began in mid-August. Instead it will provide a series of lump-sum bonuses.
Unlike GM and Chrysler, which received multibillion-dollar bailout packages in 2009 during the North American auto sector meltdown, Ford did not file for bankruptcy or ask for government funding.
“We believe that the tentative agreement offers unique-to- Canada solutions that will improve the competitiveness of the Canadian operations,” said Ford lead negotiator Stacey Allerton in a statement.
Labor costs have been the key sticking point in negotiations.
Lewenza said Ford agreed to take off the table a proposed two-tier wage scale - such as that used by the Detroit Three and United Auto Workers for the past several years to bring labor costs closer to those of foreign automakers.
CAW workers at the Detroit Three earn an average of $34 in a base hourly wage, compared with an average $28 for UAW employees, the CAW says.
Including benefits such as pensions, healthcare and overtime pay, the CAW’s total average labor cost is about $60 an hour, according to the Center for Automotive Research in Ann Arbor, Michigan. That compares with $58 for U.S. workers at Ford, $56 for GM and about $52 at Chrysler.
The CAW, seeing that the automakers are again generating profits, wants some payback for the concessions its members made during the 2008-09 financial crisis.
The CAW is adamant that its new workers must over time reach the same pay scales as existing workers. In the United States, they do not.
“As long as all of the companies understand the concept of pattern bargaining, they have the potential to get a deal done,” Lewenza said.
Writing by Andrea Hopkins; Editing by Frank McGurty; and Eric Walsh